What is a Mortgage Calculator?
A mortgage calculator is a tool meant to help you estimate your monthly mortgage payment. In general, mortgage calculators will have you fill in basic information, such as the home’s purchase price, down payment, loan term, and the interest rate. Other fields, like property taxes and homeowner’s insurance, can also be inputted for a more accurate estimation.
Keep in mind, mortgage calculators are only as accurate as the information that is entered, so it’s important to understand how to properly use one. Below, we’ll explain the basics of a mortgage calculator and other expenses to keep in mind as you estimate your monthly mortgage payment. For a more thorough understanding, follow along by filling in our simple mortgage calculator.
Mortgage Calculator Basics:
In general, all mortgage calculators will include the following fields:
- Home purchase price: Even if you haven’t picked out a home, enter in a price based on homes that include features you like, or a price that you’re comfortable spending.
- Down payment: Enter in a down payment that is realistic based on your current finances. Be sure to also consider other future expenses, such as maintenance costs, emergency funds, taxes, and other fees before committing to an amount.
- Note: Private mortgage insurance (PMI) is required when putting less than a 20% down payment, which will result in a higher monthly mortgage payment.
- Term: Enter the number of years you’ll pay the loan. Loan terms vary based on the loan type, however, 15 and 30-year terms are a popular choice when financing with a conventional loan.
- Interest Rate: Enter the current interest rate for the loan type you’re interested in applying for.
There are several other expenses to consider in addition to the basics listed above. These can include:
- Homeowners insurance: This is a form of property insurance that covers losses and damages to an individual’s house and to assets in the home. Homebuyers are required to provide proof of insurance before a lender can issue a mortgage. In Wisconsin, homeowners can expect to pay $631 per year on average.
- Property Taxes: These taxes are calculated by your local government, and are typically based on the value of your owned property and land. Wisconsin’s average effective property tax rate is 1.95% – with Dane County’s tax rate at 2.013%.
- Private Mortgage Insurance (PMI): PMI, as mentioned above, is required on loans with less than a 20% down payment. The average cost of PMI for a conventional home loan ranges from 0.55% to 2.25% of the original loan amount per year.
- Homeowners Association (HOA) fees: If you choose to purchase a condo, townhouse, or a home in a planned unit development, you may need to pay HOA fees. The cost depends on what the HOA provides, but on average, you can expect to pay approximately $200 per month.
- Loan costs: Though these are a one-time fee, they play a part in financing at the time of closing a home. Ask us how to get free loan costs at closing.
- Maintenance and up-keep: Depending on the age and condition of your home, you’re likely going to face on-going repairs and maintenance costs. A good rule of thumb is to set aside at least one percent of your home’s value every year for home maintenance.
Calculating your estimated monthly mortgage payment with a mortgage calculator, and making sure to include additional expenses can help you make more informed decisions when it comes time to buy a home or refinance. If you’re ready to apply, fill out our easy online application to begin the pre-approval process. Or, give us a call at (608) 833-3800 if you have any questions!